Company has made an accounting judgement that it will use the
Brokers\u2019 estimate as a reference for recoverable values and use
value in use calculation to calculate fair values.
On 30 June 2024 the company identified indicators of reversal of
past impairment and following a value in use calculation reversal of
past impairment was reversed per 30 June 2024. The Company did
not identify any further indicators of impairment, nor of reversal of
impairment at the reporting date 31 December 2024. Thus, no value
in use was calculated on the reporting date 31 December 2024, but
on 30 June 2024 value in use was calculated by discounting future
cash flows to present value at the balance sheet date. In the value in
use calculation, the first five years are based on the Company\u2019s
market view. A terminal value is calculated by assuming that the
applicable market view for the fifth year applies to the remaining
years of the vessel\u2019s lifetime.
The market for offshore service vessels is expected to gradually
recover from being volatile for several years. For vessels fixed on
firm contracts with a duration in the period from 2025 through 2028,
the assumption is that the firm contract remains unchanged during
the remaining contract period, and that the rate levels will gradually
improve towards 2029. Options for extended charter periods are not
considered in the value-in-use calculations. However, if charter hire
rates for optional periods are expected to be lower than market
rates for the applicable period, this is considered in the value-in-use
calculation. Three scenarios, High, Base and Low, were considered.
The relative weights were estimated based on the segments market
outlook, current employment, and vessel supply- demand balance.
The High scenario was weighted from 10% to 30%, the Base scenario
was weighted from 40% to 60% and the Low scenario was weighted
from 20% to 30%. The vessel charter rates, and utilization are the
key driver in all three scenarios and were estimated for each vessel
for the three scenarios.
In order to assess impairment, or reversal of past impairments,
estimates and assumptions regarding expected cash flows are made
which require considerable judgement. These assumptions are
among other based upon existing contracts, commercial
management judgment about future charter revenue rates, historical
performance, discount rates, class renewal expenses, financial
forecasts and industry trends and conditions.